The United States Supreme Court delivered a landmark ruling on December 10, 2025, striking down the legal framework behind former President Donald Trump's controversial tariff policy. In a 6-3 decision, the Court declared Section 232 of the Trade Expansion Act of 1962 unconstitutional as applied, stating it granted "excessive legislative power to the executive branch." This ruling immediately invalidates approximately $370 billion in tariffs imposed during the Trump administration.
The decision triggered a significant repricing in currency markets, particularly affecting the USD/INR pair. The Indian rupee strengthened by 0.8% against the US dollar, with the exchange rate dropping to 82.15 in early Asian trading. Trading volume surged 40% above the 30-day average as markets digested the implications for US-India trade relations. Analysts noted the rupee's sensitivity to US trade policy, citing similar volatility when tariffs were first imposed in 2018.
Economic impacts are projected to be substantial for India. The Confederation of Indian Industry welcomed the ruling, projecting a 3-5% increase in Indian exports to the US in the coming fiscal year. Key sectors like steel, aluminum, and chemicals, which faced Trump-era tariffs, are expected to benefit from improved market access. The ruling may also accelerate ongoing trade negotiations between the two nations, with representatives scheduled to meet in New Delhi.
Global financial markets reacted broadly. The US dollar index (DXY) fell 0.5%, Asian equities rose on improved trade outlooks, and industrial commodities strengthened. Major institutions like Goldman Sachs revised their USD/INR forecast, lowering their year-end target to 81.50 from 83.20. The Reserve Bank of India is monitoring the situation, balancing the benefits of a stronger rupee for controlling inflation against potential impacts on export competitiveness.
Commerzbank analysis, referenced in related coverage, highlights the broader "tariff chaos" and its clouding effect on USD monetary policy. The Federal Reserve now operates in a "dual uncertainty environment" where trade tensions affect both inflation and growth, complicating policy decisions. The ruling, while reducing one source of uncertainty, raises new questions about future US trade policy mechanisms, with Congressional leaders announcing plans to review trade legislation.
